Etched, the four-year-old AI chip startup positioning itself as an Nvidia challenger, this week confirmed that TSMC manufactured its first chip earlier this year. The company, now valued at $5 billion, is preparing to ship systems built around that silicon to customers later this summer.
That’s the good news. The harder part is scaling. Like every other chip designer chasing the AI boom, Etched has to elbow its way into TSMC’s crowded Taiwan fabs, where capacity is scarce and demand is relentless. The queue is long, and being small doesn’t help.
Enter Copper Sky Capital, one of Etched’s early backers, which thinks it has an angle on the bottleneck: Arizona. The Phoenix-based firm is betting that Etched can eventually route production through TSMC’s Arizona facility, easing the pressure on its Taiwanese supply line.
The story of how Copper Sky got into Etched at all is telling. When the firm joined Etched’s $120 million Series A two years ago, founder Jack Selby reportedly landed his allocation partly by pledging to help the startup reshore chip fabrication to Arizona. Selby — a former PayPal executive and longtime managing director at Peter Thiel’s family office, Thiel Capital — founded Copper Sky in 2021, when it went by AZ-VC.
Selby’s original thesis was contrarian: coastal startups in California, Massachusetts and New York are, in his view, grossly overpriced next to companies emerging in Arizona and the Southwest. But he also spotted a two-way trade — helping California hardware startups relocate manufacturing to his home turf.
His leverage isn’t just capital. As a board member of the Arizona Commerce Authority, Selby is directly involved in luring out-of-state manufacturers into the region, and he credits that role for getting Copper Sky into an otherwise closed deal.
“When Copper Sky invested with Etched, the company clearly understood our connectivity to the Arizona semiconductor industry, and in particular the local TSMC GIGAFAB,” Selby told TechCrunch.
Copper Sky’s debut fund raised $115 million, aimed largely at Southwest startups. Since then the firm has broadened its scope to nontraditional venture hubs across the country, with a stated appetite for hardware companies — including in defense — that can plant manufacturing operations in Arizona.
There’s more dry powder on the way. According to a regulatory filing, Copper Sky is raising a $300 million second fund, giving it room to chase pricier coastal names alongside its regional bets.
For Etched, the payoff is less about the check and more about the connections behind it. Designing a competitive AI inference chip is one battle; getting enough of them built is another entirely — and that’s where geography, and a well-placed investor, may matter as much as engineering.
